US car sales tank in February due to higher rates, less discounting

Takeaway: don’t expect the same discounting as last year, at least until they get desperate to clear the lots.

https://www.wsj.com/articles/u-s-car-sales-down-in-february-1519915380

As reported in WSJ:

Auto sales fell sharply in February as tightening credit conditions, higher interest rates and stingy discounts drove up monthly payments and slowed the U.S. car business even as the broader economy remains strong.

Detroit auto makers on Thursday reported the second-consecutive collective decline in domestic sales in 2018, with dealers saying that it is getting harder to offer customers an attractive monthly payment.

Even as automobiles get more expensive due to the introduction of new technology and a migration to heftier trucks and SUVs, buyers had been largely able to afford more car due to easy credit terms, low interest rates and a flood of incentives.

“I can’t match previous payments,” Ali Reda, a salesman at Les Stanford Chevrolet in Dearborn, Mich., said. “Buying power is more limited.”

Mr. Reda set the all-time individual sales record for a salesman in 2017, but keeping that pace this year will be tough, he said.

Customers are being more heavily scrutinized, with banks being more cautious about giving loans to buyers with balances on their credit cards, for instance.

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Brace yourselves…

I am for ‘loving, loving’ tariffs says Trump as he threatens a 25 per cent import tax on European cars after EU threatens to hit U.S. bourbon and Harley Davidson to retaliate for steel

https://www.bloomberg.com/news/articles/2018-03-06/gary-cohn-to-resign-as-trump-economic-adviser-amid-trade-dispute

I think we’ve been seeing that here. The scope of good deals has definitely narrowed. The toughest deals to be had as we can see are in premium brand SUV’s. They will push less metal and more profit. The problems that many dealers have expanded for the past sales, so layoffs must be happening or will be?

Car deals aside, I’m trying to figure out the difference between a regular tariff and a “loving” tariff.

It will be interesting to see how long manufacturers go before blinking. The reliance on promotions to move metal is the name of the game these days. You can’t deliver market growth and volume to your share holders with fewer cars sold, even if you don’t take a bath on the margin after thousands of dollars of rebates.

It applied with lotion and small hands.

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